California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - After the dot-com bust and the Great Recession, it took four and five years, respectively, for revenues to recover. Incorporating revenue risk into the budget now, therefore, reflects prudence, not pessimism.
https://lao.ca.gov/Publications/Report/5104

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - For California, the dot ‑com era —when stocks rose and then fell precipitously in response to widespread adoption of the internet —offers the most salient example. The internet has proven to be a transformative technology and, yet, the stock market ’s initial reaction was clearly overly exuberant.
https://lao.ca.gov/Publications/Report/5091

Whether or Not to Tap Reserves to Solve Estimated Budget Problem Emerges as Key Fiscal Decision Facing California’s Legislature

Apr 19, 2023 - Other downturns, such as the 2001 so-called dot-com recession, had severe fiscal implications while inflicting somewhat milder economic damage. The 2008 Great Recession had brutal effects on both the state ’s economy and budget.
https://lao.ca.gov/Publications/Report/4762

The 2023-24 Budget: Multiyear Assessment

Feb 15, 2023 - Three of those —the recession in the early 1990s, the dot ‑com bust in the early 2000s, and the Great Recession —resulted in large revenue shortfalls and ensuing multiyear deficits, even for some years after each recession ended.
https://lao.ca.gov/Publications/Report/4687

Rethinking California's Reserve Policy

Apr 10, 2025 - In March of 2004, on the heels of the dot ‑com bust, voters passed Proposition  58, which created the Budget Stabilization Account (BSA). In the 2006 ‑07 budget, the Legislature deposited $472  million into the BSA and in 2007 ‑08 deposited $1.5  billion.
https://lao.ca.gov/Publications/Report/5028

Flexible Funding to California in the American Rescue Plan

Mar 23, 2021 - The statutory language appears to prohibit any kind of tax reduction —direct or indirect —if the state accepts all of the fiscal relief funds. (Otherwise, the federal government will reduce the state ’s share of relief funds by the amount of the tax reduction.)
https://lao.ca.gov/Publications/Report/4407

The 2024-25 Budget: Initial Comments on the Governor’s May Revision

May 17, 2024 - This risk might be acceptable, however, particularly if the Legislature adopts the May Revision budget structure. Introduction On May 14, 2024, Governor Newsom presented a revised state budget proposal to the Legislature.
https://lao.ca.gov/Publications/Report/4902

The 2023-24 California Spending Plan: Other Provisions

Nov 8, 2023 - These amendments also allow OIS to provide recommendations on how nonreporting entities can improve their IS programs, but does not require the nonreporting entities to accept or follow OIS’ guidance.
https://lao.ca.gov/Publications/Report/4814

The 2025-26 Budget: California's Fiscal Outlook

Nov 20, 2024 - Similarly, the number of Californians who are unemployed is 25  percent higher than during the strong labor markets of 2019 and 2022. Consumer spending (measured by inflation ‑adjusted retail sales and taxable sales) has continued to decline throughout  2024.
https://lao.ca.gov/Publications/Report/4939

The State Appropriations Limit

Apr 21, 2021 - The state ’s appropriations subject to the limit fell substantially during the dot ‑com bust in the early 2000s and again during the Great Recession due to the significant decline in state revenues during those downturns.
https://lao.ca.gov/Publications/Report/4416